Betsy's Gift Baskets Sells Gift Baskets, on Average, for $125;

Essay

Betsy's Gift Baskets sells gift baskets, on average, for $125; each gift basket costs, on average, $60. Betsy pays salaries each month of $1,300 and her store rent is $1,000 per month. She also pays sales commissions of 5% of the sales price. In May, 140 gift baskets were sold.
Required:
a. Prepare a traditional income statement for the month of May.
b. Prepare a contribution margin income statement for the month of May.